Today I read a blog post titled Look for Restaurant Service to Deteriorate When Minimum Wage Goes Up Next Month. The basic argument was that restaurant service is in Seattle is sub par because restaurants are understaffed, which in turn is blamed on the onerous burden of restaurants having to pay waitstaff the minimum wage. Leaving aside the fact that I find service in Seattle restaurants generally so good that the author and I must inhabit parallel universes, the whole premise of the piece bothered me. I decided to actually do some arithmetic, and found it even more specious than my gut had told me.
Here are the specific claims made by the article:
- A typical server in a restaurant outside Seattle is covering 3-4 tables
- A typical server in Seattle is covering 5-6
- This difference is because many states allow employers to pay below minimum wage to staff who get tips, while Washington is too decent a place to permit that practice.
- When the minimum wage goes up in January, from $8.67/hr to $9.04/hr, as it’s legally mandated to do, this increase will force poor starving restaurateurs to lay off more servers.
- The alternative is for restaurants to charge “$17 for a chicken sandwich” because apparently that’s how expensive they’d have to get to offset this expense.
Let’s assume for a moment that every restaurant wants to have no more than 3 tables per server. Personally I think 3 tables per server is a sign of a pretty high-end restaurant—the kind of place that really would charge $17 for a chicken sandwich and compensate by telling you the chicken’s name—but let’s grant the author that assumption. And let’s assume that a typical seating lasts an hour and a half. That means the average server is serving two tables per hour, so at current minimum wage they earn $4.34 per table; a markup of $3.28 relative to the disgusting pittance North Carolina restaurateurs are allowed to pay. Even a modestly priced restaurant will make that back from the markup on a single glass of wine!
The argument gets even more absurd when fretting about the coming increase. The minimum wage will go up by 37 cents/hour, or just over 4%. Even if the wages of minimum-wage employees were a restaurant’s entire cost structure, how many layoffs is an increase of 4% going to cause? And then there’s the reality that waitstaff pay is a tiny fraction of a restaurant’s running costs, especially in a city with expensive commercial rents like Seattle.
There is a real threat to the restaurant industry, just mentioned tangentially in the article, but it’s not the inflation-indexing of the minimum wage. It’s the likelihood that most people will cut back spending on little luxuries like dining out in the coming year. How that trend would be influenced by cutting pay for a group of people is left as an exercise to the reader.